Wegovy gains Medicare, Medicaid coverage for heart benefits

Novo Nordisk's (NVO) weight-loss medication, Wegovy, will now be covered by Medicare and Medicaid. This decision comes in light of the drug's demonstrated health benefits associated with mitigating the risk of heart disease. However, coverage under these healthcare providers will be exclusively granted to individuals utilizing Wegovy for the purpose of managing heart-related conditions.

Yahoo Finance Health Reporter Anjalee Khemlani breaks down the details.

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Editor's note: This article was written by Angel Smith

Video Transcript

[AUDIO LOGO]

RACHELLE AKUFFO: Both Medicare and Medicaid will now provide coverage for the popular weight loss drug Wegovy but only for those who may need to take the drug for heart-related heart disease related conditions. Let's bring in Yahoo Finance's Anjalee Khemlani to give us those details. Interesting development here, Anjalee.

ANJALEE KHEMLANI: That's right, Rachelle and one that of course, investors were waiting for, because they knew that Novo Nordisk had done this study for heart disease. When they got the approval from the FDA, then really opened the door for CMS to cover this. So now Medicare Part D will cover the drug for those who get it prescribed for heart conditions. If you recall, the FDA did expand the label for Wegovy, which is Novo Nordisk's weight loss drug, because it showed a 20% reduction in heart disease.

So with that came of course, the door opening for coverage. Medicaid also at the state level will now be required to cover this. And this came from guidance from CMS, who sent Yahoo Finance a statement saying that Part D coverage is still not available for weight management. So it still isn't available for those who want to use it for the original purpose. However, they can now use it for this reason.

Now, how does this affect those $100 billion market estimates by the end of the decade? Well, Mizuho analysts are saying that it actually just reinforces the stance. So Jared Holt said in a quote, "We do not believe the Street will greatly alter near-term estimates if at all, but the chasm between supply and demand remains incredibly pronounced." And so what we're dealing with now is increased uses for the drug. But still the issue of supply-- we know that not only Wegovy but also Eli Lilly's zepbound are in high demand after their approvals. And that only seems to continue.

With the other studies that are now down the pike, Eli Lilly does have a heart study in the wings. It's slated to end sometime this summer. So we're going to get a readout then. It's likely to follow suit. So bodes well for Lilly as well. Meanwhile, the two companies are also studying things like liver and kidney disease, sleep apnea as well as potentially addiction. There have been some advocates for that. So it really just-- the story really is just going to continue from here.

RACHELLE AKUFFO: Indeed. And that demand is certainly not going anywhere. Appreciate you breaking that down for us. Our very own Anjalee Khemlani.